Lower your taxes when you move for work

The IRS allows taxpayers to write off moving costs — but there are catches

By

BillBischoff

If you move for work-related reasons, you may be allowed to deduct some expenses on page 1 of Form 1040. Page 1 treatment is good, because you don’t have to itemize to reap a tax-saving benefit. Here’s what you need to know.

The Internal Revenue Code sets up two tests for moving expenses. You must pass both to claim a deduction.

The 50-mile test

The distance between your former home and your new job location must be at least 50 miles greater than the distance between your former home and your old job location. Oddly enough, the location of your new home doesn't even enter into the equation. Go figure.

Anyway, when attempting to pass the 50-mile test, please understand that you don’t need to actually change jobs. For instance, your existing job might get transferred to a new location that’s farther away from your old home.

Example 1: Your former home was 10 miles away from your old office location. Your former home is 45 miles away from your new office. You fail the 50-mile test. So you can’t deduct any moving expenses. Sorry about that.

Example 2: Your former home was 10 miles from your old office. Your former home is 65 miles away from your new office. Since the difference is 55 miles, you pass the 50-mile test with five miles to spare. So far, so good.

The 39-week test

The second test generally requires you to be employed full-time in the area of your new job location for at least 39 weeks during the 12 months after you make the move. The purpose of this test is to disallow moving-expense deductions for folks who move for a change in scenery rather than for work-related reasons.

If you’ve re-entered the full-time work force, you can claim a moving-expense deduction if your former residence and the job location are at least 50 miles apart and you pass the 39-week test.

Recent college grads take note: When you snag your first full-time job, you can claim a moving expense deduction if your former residence and the job location are at least 50 miles apart and you pass the 39-week test.

If you’re a married joint-filer, only one spouse needs to pass the 50-mile and the 39-week tests.

Special rules apply to self-employed folks, to military personnel and for foreign moves. For details, see IRS Publication 521 at IRS.gov.

What can you deduct

If you successfully pass the 50-mile and 39-week tests, your allowable moving deduction is limited to only a few eligible expenses. Even so, the deduction can be meaningful.

•You can write off the cost to pack and ship your possessions and up to 30 days of storage and insurance.

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